At the monthly senior management meeting of Maruwa Sdn Bhd on 1 May 2018, various suggestions were made to improve the profit to be made by selling the firm's single product in the last quarter of the year ending 30 April 2018. The product is not subject to seasonal demand fluctuations, but there are several competitors producing similar items. In the first quarter of the year a suggestion was made that profit could be improved if the selling price were reduced by 5 per cent, and this was put into effect at the beginning of the second quarter. As the new price undercut that of the rival firms, demand increased, and the firm's break-even point was reduced. The following suggestions have now been raised: i. Differentiate the product from its rivals by giving it a more distinctive shape, colour and packaging. This would increase material costs per unit by RM0.30, but selling price would not be raised. Demand is then predicted to rise by 10 per cent; ii. Improve the quality of the product by strengthening it and giving it a one-year guarantee material costs would then increase by RM0.15 per unit and labour costs by RM0.30 per unit. Selling price would rise by RM0.40 per unit, and demand increase by 7 per cent; iii. Further reduce the selling price by 10 per cent - demand to rise by 20 per cent; Data for: Number of units produced and sold Selling price per unit Materials per unit Labour per unit Variable factory overhead per unit Variable selling costs per unit Fixed factory overhead Fixed selling and administration costs First quarter Second quarter 9,000 10,800 RM RM 14 13.30 3.65 3.65 2.10 2.10 1.40 1.40 0.85 0.85 21,375 21,375 16,125 16,125 Required: a) Calculate the profit made in each of the first and second quarters, showing clearly the contribution per unit in each case. (6 marks) b) Calculate break-even points and margins of safety for each quarter. (4 marks) c) Taking each suggestion independently, calculate the profit that might be made in the second quarter if each of them were to be implemented. (5 marks) d) Briefly explain to the senior managers about assumptions in the break-even process that may limit its usefulness (5 marks) (Total: 20 marks)